Is your company considering setting up a subsidiary in Chile? If so, you need to think about more than finding a place and opening the doors. The subsidiary process can take months to complete, and that’s before it is even possible start to hiring employees. It’s critical to understand all parts of Chile subsidiary laws to determine if setting up a subsidiary or working with an Employer of Record is the right choice for your company.
How to establish a Chile subsidiary
The first step is incorporation of the subsidiary and its registration with the Registro de Comercio and Servicio de Impuestos Internos. It takes around 15 to 20 days to fully enroll. It is also necessary to publish a social constitution and create in-country bank accounts, which require official paperwork to open. Creating this account can take 4-8 weeks to complete.
Other steps include:
- Getting a company name approved by Chile’s Company Registry.
- Drafting a brief description of the company’s business.
- Writing and registering all shareholders’ names and company director details.
- Creating a registered office address in Chile.
- Producing a Memorandum of Association and Articles of Association and presenting before the Conservador de Comercio.
A limited liability company which is probably one of the more common incorporation forms in Chile, needs a minimum of 2 shareholders and 1 director. Shareholders may be local or international. However, they must be registered with the tax authority, and the tax authorities usually require the company to have a representative who is a Chilean resident.
Chile subsidiary laws
Companies are required to follow a variety of Chile subsidiary laws to stay compliant. Otherwise, they could face hefty fines, or the subsidiary could even get shut down. One major law might require the employer to pay employees and authorities from an in-country bank account, which is a crucial step when setting up a subsidiary in Chile.
It is also necessary to choose a company name that is not already in use. When it comes time to submit the shareholders’ details, they can be either corporations or individuals of any nationality, but the information must include their names. It is possible to have between 2 and 50 shareholders. The subsidiary’s director can also be of any nationality and does not need to live in Chile.
Make sure to get a Tax Identification Number known as a Rol Unico Tributario (RUT) in Chile. Chile subsidiary law states that companies have to obtain a signed public deed and publish the subsidiary in the Official Gazette.
Benefits of establishing a Chile subsidiary
The most significant benefit of setting up a Chile subsidiary is the legal ability to conduct operations and hire local workers. There is also limited liability between the subsidiary and the parent company, which protects the parent company from litigation or potential loss arising from its Chile subsidiary.
The limited liability structure also allows a Chile subsidiary to operate under its own culture. This structural framework will enable the subsidiary to create an identity separate from the parent company that conforms to the general culture and business norms in Chile.
You can take advantage of even greater benefits with G-P’s Global Growth Platform™, which eliminates the need to set up an entity or subsidiary – so you can start your operations sooner.
Other important considerations
When a company decide to expand its business to Chile, it is necessary to have a complete understanding of Chile subsidiary and employment laws, and be prepared to expend time and money to complete the subsidiary setup process.
The Chile subsidiary setup process might also require finding legal representation, which can add to the time and expense of incorporating your entity.
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